Tech stocks plummeted Thursday as election-driven policy concerns sparked a massive sell-off in AI-linked assets, pushing the Nasdaq into correction territory and forcing investors to reconsider their exposure.
The Nasdaq Composite dropped 5% on Thursday and fell more than 11% below its record high from last month, entering correction territory. The trigger is post-midterm doubt over the ~$1.2 trillion of 2026 AI capex, as Democrats may restrict data center buildout. Continued reassessment of AI exposure could keep pressure on the index in coming days.
After Tuesday's midterm elections, investors fear Democratic policymakers may slow the data center buildout, putting the roughly $1.2 trillion of forecast AI capex for next year in doubt, and the index fell 5% on Thursday into correction territory.
The article says opinion is split: some experts see this as the start of the end of the AI trade, while others argue it is a pullback in an uptrend and a buying opportunity at current valuations.
The iShares Semiconductor ETF dropped 11% on Thursday, its biggest decline since the Covid breakout in March 2020, as Wall Street redid its math on how potential Democratic restrictions on data centers could hit chipmakers' future growth. Semiconductors are the most direct exposure to the threatened capex slowdown.
It dropped 11% on Thursday, its biggest decline since March 2020, as investors questioned whether the forecast $1.2 trillion of AI capex next year will actually happen if Democrats slow the data center buildout.
The Global X Artificial Intelligence & Technology ETF fell 6% on the day and is down 15% over the past month, directly exposed to the AI infrastructure buildout whose outlook Cantor Fitzgerald calls fundamentally changed. Uncertainty over Democratic data center restrictions keeps near-term pressure on the fund.
AIQ fell 6% on Thursday and is down 15% over the past month amid doubts about the AI data center buildout after the midterm elections.
Thursday's tech-led selling spilled over into non-AI stocks, with the Dow Jones Industrial Average down more than 1,600 points. The broad risk-off move tied to doubts about the AI buildout and the 4.8% 10-year yield pulling investors toward safer assets weighs on the index near term.
Yes, the selling in AI-related tech spilled over to non-AI stocks, leaving the Dow down more than 1,600 points on Thursday.
The article cites the 4.8% 10-year Treasury yield as a compelling risk-free rate prompting investors to reconsider holding volatile AI stocks, and notes investors may rotate toward T-bills. Flight-to-safety demand would tend to push the yield down, but the article gives no directional data on rates itself.
At 4.8%, the risk-free rate looks compelling enough that investors are reconsidering taking risk in volatile AI stocks, per Josh Brown.
The Nasdaq Composite entered correction territory, falling 5% on Thursday as investors reassess the $1.2 trillion AI capital expenditure forecast. Concerns over potential Democratic restrictions on data center expansion have triggered a broad market sell-off, with the Dow Jones Industrial Average sliding over 1,600 points. While some analysts warn of a fundamental shift in the AI trade, others view the indiscriminate selling as a long-term buying opportunity.
The index dropped 5% on Thursday as investors reacted to midterm election results, fearing that a Democratic-led government might restrict data center buildouts and jeopardize future AI infrastructure spending.
Opinions are split; while some analysts believe the outlook for AI infrastructure has fundamentally changed, others argue that demand remains strong and current valuations represent a buying opportunity.